In recent years, the rapid growth of electronic commerce has been observed, affecting not only people's daily lives but also the country's economy. Against the background of rapid changes, the role of SME business sectors is noteworthy in digitization, which significantly contributes to the growth of the global economy. SMEs represent about 90% of businesses, and 50% of people are employed in this sector globally. SMEs generate a 40% share of GDP, which is likely to increase further if informal SMEs are taken into account.
Benefits of moving to e-commerce for SMEs
The growing trend of e-commerce creates the best opportunity for SME advancement and development. By digitizing the company, they will be able to expand their business, seize new markets and be less dependent on the country's economy. E-commerce allows businesses to be available 24 hours a day, improving communication with customers, which creates added value. By using digital technologies, SMEs can easily reduce marketing costs and spread information about the brand in a faster and more efficient way, simplify the delivery system, and create faster and more efficient services. Switching to e-commerce will not only save SMEs costs but also enable them to become even more productive and competitive.
Significant challenges
I will highlight important challenges faced by small and medium entrepreneurs:
E-commerce creates significant benefits for SMEs, although, based on statistics, the digitization of SMEs is not characterized by a growing pace. In this process, businesses face several challenges that reduce their readiness to digitize their business. Most people prefer stability, which prevents them from taking a step toward change.
In today's digital world, all types of businesses aim to exist in the online space, although the SME business sector differs from large companies in terms of cash and other resources. SMEs follow technological development relatively slowly, which has its reasons. The behavior of SMEs is mainly toward stability and it is difficult for them to take certain risks. There are real reasons for this. For them, value is crucial. Business digitization requires certain investments, which is more difficult for SME entrepreneurs than for relatively large businesses.
It is also worth noting that SMEs are less likely to receive bank loans in contrast to large firms. They try to raise internal funds or get funding from friends and family to initially run the business.
Ensuring the security of payments and the privacy of personal data can be considered a serious challenge for SME businesses due to limited opportunities. The costs associated with establishing trust and reducing risks are much more important for them than for large companies with which they already have a strong brand. Those who have experience working in the Internet space consider viruses and cyber-attacks to be the biggest threat, although SMEs, who have no experience in e-commerce at all, feel much safer.
Also, the lack of human resources can be considered an important challenge. Lack of staff leads to a lack of competence in the team, due to which they do not know how to use e-commerce for business growth and development. In addition to this, the lack of time is also added, since start-ups and medium-sized businesses often take on many functions and duties.
Conclusion
SMEs face many challenges that hinder their growth. Often, due to excessive saving of resources, they refuse even such opportunities that would save them time and increase their income. They are afraid to invest money in e-commerce and sometimes they prefer to sell through traditional methods and get a stable income.
However, in today's rapidly growing technological environment, it is important to act quickly, to keep pace with technological development as much as possible, to increase production, to reduce costs, to make processes more automated, not to avoid hiring staff, which today the Internet has made even easier. Today, we can easily attract the desired employees and even offer online work, or even hire a company outsourced.
SMEs should not be afraid to allocate resources to increase production if there is a growing demand for the product. This is often the biggest challenge for entrepreneurs because they fear they won't be able to handle the growing demand. However, if the company has managed to reach this far, it should think about increasing production and making significant changes to do so.
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Author: Ana Nadiradze
